Wednesday, June 29, 2011

As a conservative, it's with quite a bit of dismay that I read of other supposed conservative commentators calling for Greece to restructure (not to pay back) it's debts. Others are calling for Greece to opt out of the Euro and to go back to the drachma, thereby being able to manipulate its currency to pay back its debt. Amongst far too many commentators there is the notion that a bit of inflation is not too bad a thing, as it makes stealing paying back debts easier.

The problem with this line of thinking is that they haven't thought about the problem very deeply, else they wouldn't be advocating such a stupid notion.

We need to remind ourselves one of the ways that banks make money is by lending out other peoples money. That "other peoples money" is usually someone else's saving or investment. Hence, when commentators are advocating that Greece give the bankers "the finger" what they're advocating is that Greeks give the finger to the bankers,........and the little old lady who saved up for their retirement..........and the nurses pension fund...........and the couple saving for their first home.

The biggest losers of any debt restructuring will be both the Greeks, whom afterwards no one will want to lend to(austerity then won't be an option), and some baby boomers whose retirement funds will be vapourised in the process. It's a lose/lose situation.

However it would be a mistake to think that this is just a Greek Crisis. I've got the feeling that the birthplace of democracy will also end up having its burial of it there.

The problem is that nearly all the western countries have borrowed more than prudent, and at the moment, systemic debt is so great that there is simply no way to pay it back. The net result of this is that a lot of people, particularly baby boomers who were encouraged to save for their retirement, are going to be poorer--a lot poorer--as a result of global debt "restructuring".

Previously, given the pyramidal demographic structure of the West. Inflation which eroded the savings of retiree's could be compensated for by increasing taxation and hence spending on social security. However as birth rates collapsed, the pyramidal demographic structure has become a rectangle, the ratio of workers to retirees is much smaller.

The cultural and political implications of this make for unsettling prognostication for a conservative. The baby boomers, who are still a very large demographic block, are not going to give up the retirement which they were counting on just because their own funds vapourised, rather they will vote for politicians who promise them "social justice". Just as there was in the Great Depression, there will be a cultural and political lurch to the left. The New Deal would have been impossible without the Great Depression.

Futhermore, taxation social security spending will continue to remain high for a long time yet, a least until the baby boomers cease being viable political force.

The problem with careerism is that fundamentally it is incompatible with the concept of marriage, since careerism is fundamentally solipsistic.

At it essence, careerism is the pursuit of self-identity through work and as such is fundamentally self-focused.

Marriage, on the other hand, was traditionally (and correctly) thought of as a union of two people. In being united, they were "one thing" and henceforth the "other" had to be factored in all calculations. Marriage, as traditionally understood was intrinsically anti-solipsistic.

A career then is only compatible with a marriage as long as it is subordinate to it. In other words, a career is quite OK when it takes the marriage into account, it's not OK when the marriage is subordinate to it. A woman whose career comes first is a woman who is attacking the very nature of her marriage.

The reason why I bring this up is that many that careerism is a vice in women, something I agree. But what they fail to see is that careerism is a vice in men as well. People can be unfaithful to their marriage by sleeping with others but they can also be unfaithful to the marriage by having an affair with their job.

Friday, June 24, 2011

It's an old article but a good one and pertinent once again to contemporary financial events.

It is perhaps an inherent problem wherever the universal franchise is unaccompanied by widespread virtues such as honesty, self-control, providence, prudence and self-respect. Greece is therefore a cradle not only of democracy, but also of democratic corruption.

The Greek demonstrators did not understand, or did not want to understand, that if there were justice in the world, many people, including themselves, would be worse rather than better off, and that a reduction in their salaries and benefits was not only economically necessary but just.

Read of the rest of the article here. The American Founding Fathers knew the score: Democracy ends when the mob becomes corrupted. It's not just the bankers and politicians which are wicked, so are the people.

Assuming all other variables are held constant, economic liberalism is the best way to maximise growth and world prosperity. Free trade, prudently minimal regulation of the market, property rights and "sound money" are the best way to increase wealth. I think many economic libertarians think along the similar lines when they criticise the two above mentioned bloggers. The problem with many of these libertarians though is that they can't see past the "economics" of the question and recongise that economic activity does not exist in isolation but is intimately intermeshed in the social and political dimensions of the real world.

Take for example the concept of a minimal living wage. There is no doubt in my mind that setting a "floor" on wages will result in the non-viability of certain business arrangements. In other words, there will be less business activity and hence smaller economy by doing this. However having decent minimal wages means that there are less destitute on the streets, less child labour, less proclivity for social revolution and less incentive for crimes of need.

Socialism was not born in a vacuum. It's fertile feeding ground were the poor, especially the labouring industrial poor, swelling in multitude with the idustrialisation of Europe and America. The resentment felt to their capitalist masters may have been justified or not, but it was a resentment that was exploited to assist the birth of Socialism.

Efficient capital allocation is only possible in a society of human beings that allows it. If the society puts a stop on it, capitalism dies. Therefore the primary aim of any good capitalist is to ensure that society remains in such a state that allows capital allocation to the degree in which it is possible in that particular society. The good capitalist wants to avoid the capitalism that pisses the majority of the people off.

Likewise, free trade is another example of their inability to see the bigger picture. I'm all for free trade but it needs to be recognised that free trade has its trade offs. The more free trade the more interdependent the countries become and this in turn limits the independence of a country. Australia is a strongly pro-human rights country, except when it comes to China. Perhaps it being our biggest trading partner has something to do with it?

The point I'm trying to make is much like the point I was trying to make on my post on Engine Failure.
Ensuring that the "economic engine" runs long term probably means running the engine at sub-maximum potential, the limiting factor not being the "economics" but the other parameters and components which make up the economy.

This difference between the maximum theoretical and the maximum practical economy is the "price" we pay for system stability. I think it is money well spent.

Sunday, June 12, 2011

Australia is blessed with sun to the degree that Canada is blessed with snow. It's exceptional for it not to be sunny here. As a consequence, Australia is "blessed" with extraordinary high rates of skin cancer compared to the rest of the world. The pale skin of the Europeans (especially the Aryan types) is prone to mutagenisis when exposed to copious Australian sun. Fortunately, most skin cancers are relatively benign, and a good part of the average GP's practice consists of cutting out skin cancers.

With the exception of people who have rare genetic conditions, the risk of skin cancer is correlated with sun exposure. In fact we can roughly plot the risk/exposure graph as follows.

From about the mid 30's to the late 70's the local culture strongly promoted sun exposure and as a consequence, the skin cancer rates were quite high. Concerned individuals lobbied the government and a quite successful skin cancer awareness and protection campaign was launched. Dermatologists and a government funded campaign advised people to limit their exposure to the sun. It was a quite successful program and people are now far more aware of skin cancer than before and widespread protective measures are employed. As a consequence, skin cancer rates in young people have begun to stabilise, the old are still suffering for their previous sins.

In the mid 90's however it began to be noted that more and more people were becoming Vitamin D deficient. Now Vitamin D deficiency contributes to osteoporosis which most people think is relatively benign. Yet the disease burden of this condition is quite significant, resulting in fractures, pain and a quite severe reduction quality of life. Endocrinologists were to first to notice this affect, and their solution was to get more sun.

In fact if we plot the risk of Vitamin D deficient osteoporosis vs sunlight we get the following graph.

As we can see the risk of one is inversely related to the other. Choose your poison. More sun, increase your risk of skin cancer, less sun increase your risk of osteoporosis. You can't win.

A lot of the conflicting "medical advice" that people get from the mainstream media is due to the above phenomenon. Given the "connectedness" of biological processes. Altering one, results in effects on other systems. The source of this conflicting medical advice is from the medical profession, particularly the specialist component of medicine.

The nature of the medical profession is such that when expert opinion is required on any matter, the authoritative words of a specialist in the field is required. This professional, who is very knowledgeable in their particular field, looks at the human being from the vantage point of that particular field, offers advice from the vantage point of that particular field. So when the news article is about skin cancer, a knowledgeable dermatologist is trotted out who advocates less sun. Two weeks later when the osteoporosis is the flavour of the day, and endochrinologist is trotted out who advises people to get more sun. The public are confused.

The problem is of course, specialisation, which is another word for cognitive compartmentalisation. It takes a generalist to see what the specialist can't. A generalist would ask, what is the systemic risk vs sun exposure? A crude graph could be drawn as follows:

Here we see that minimum risk is somewhere between the two extremes. Trying to avoid one pathology by avoiding all the risk factors associated with it frequently increases the risk of a different one. Zero risk is impossible, and trying the achieve it is likely to lead to more pathology. The trick to healthy living is to minimise risk, not avoid it all together. It's the common-sense philosophy of the golden mean.

As a side issue. It would appear that the healthy human beings need a reasonable amount of sun exposure on their skin to keep them healthy. Excessive Victorian Era and Modern Islamic prudery are objectively unhealthy. People need to show a little flesh to be healthy.

Friday, June 10, 2011

Most of the manospehere has rightly condemned the slutwalk phenomenon for the idiocy that it is. In the end what the sluts are protesting against is human nature. Men will always be attracted to provocatively dressed women because they signal sexual availability. And a woman who signals sexual availability through her dress, is more likely to be a target for unwanted sexual attention than a woman that is demurely dressed. This is not my opinion this is fact. Protesting about this fact of human nature shows a degree of either entrenched idiocy or social autism or both.

What the slutwalkers are complaining about is having to take account of the problem of evil in their day to day affairs. Evil, in this instance, being the propensity to be raped. The core contention of their theory is that with enough "education", punishment and shaming men can be stopped from raping. This, of course, is a rejection of the doctrine of original sin. No amount of legal stricture will ever stop evil.

Normal people recognise the existence of evil in their day to day affairs and accommodate for it. Girls don't dress provocatively around drunken men, they don't take rides with strangers, they don't walk through dark parks at night and so on. Yes, in an ideal world there should be no threat to their safety, but the world is not ideal and trying to ignore the existence of evil in the human condition is simply reality avoidance.

A lot of the Austrian Economic school are a bit like the slutwalkers. I personally believe that they provide the best explanation with regard to economic phenomena with one exception, they are socially autistic. Sluts complain about getting raped when dressed provocatively, and Austrians complain about people getting upset at loosing their jobs as a consequence of economic efficiency. Both completely ignore the reality of human nature.

Take for example envy. The Austrian school says that it is bad, and I agree, that just like rape it is bad. But envy, like rape, is a real world phenomenon and any decent economic theory has to take it into account. Unfettered capitalism may make the world a richer place but the forces of envy that it unleashes may destroy the world and any sane economic theory must take into account envy, not simply protest about it. What may limit successful long term capitalism may not necessarily be resource access but envy which restricts capital allocation.

A smarter economic theory would acknowledge envy and try to mitigate (not eliminate since it is impossible) it's effect by economic means. No one ever asks the question, is it possible to maintain social stability with maximum economic efficiency? It's always assumed it is possible, yet is it?

The greatest threat to capitalism is socialism. An ideology which was born during the greatest period of laissez faire capitalism in history. The parents of Socialism were Darwinian capitalism intersecting with human nature.

Personally I don't think it is possible; optimising for one parameter, say economic efficiency, comes at the expense of social stability, which is ultimately the foundation of the economy. I think that there is a sweet spot along the economic efficiency "curve" which mitigates envy enough to stop it being a threat.

The Austrians have a good explanation for economic events. The problem with their theory, though, is that there is a huge blind spot in acknowledging the evil in human nature and making allowances for it. Just like the slutwalkers.

Tuesday, June 07, 2011

In the post on engine design, commentator R Brockman made the following comment;

The interesting question is whether there are multiple stable equilibrium points. What happens when a society goes outside the set of parameters that it was "designed" for? Advanced technology has radically changed our life -- do the Old Design Rules still work?

I think that this warrants some further elaboration. It's my belief, and a cursory examination of history will confirm, that it is possible to have different type of societies (i.e equilibrium points) but only only within certain limits. The whole point about the "Tao of Life" is that there is more commonality amongst enduring societies than than there are differences.

I suppose the reason why there is limited range of equilibrium points within a human societal "system" is because the material from which human society is built, human nature, puts constraints on types of societal structures that can be maintained. Human capabilities with regard to jealousy, trust, fear, love, friendship, etc. are the limiting factors with regard to human interaction. Human nature is the material from which societal "engines" are formed, and this in turn places limits on the type of enduring societies that are possible.

An example of this is with regard to sexuality. Most men naturally desire variety and it would be expected, that given this nature, societies would develop which would cater to this fact. Yet it's pretty obvious that culturaly advanced polyamorous societies have failed to develop, since sexual activity occurs in the context of other parameters such as reproduction, love and investment. Any society that attempted to institute such a practice would be torn apart by feuds, lusts, jealousy etc. Likewise, Communism, a great idea in theory, fails because it ignores the fact the human nature responds to incentives.

Human nature, being what it is, therefore limits the type of advanced societies that can exist.